NEW YORK — Broadcom Inc. shares tumbled sharply on Thursday, triggering a broader selloff in artificial intelligence chip stocks after the semiconductor company’s outlook for AI-related revenue fell short of elevated investor expectations.
Broadcom shares fell more than 12% on Thursday, marking one of the company’s largest one-day declines in over a year, according to market data. The drop erased tens of billions of dollars in market value and weighed on peers including Nvidia, AMD and other semiconductor names. The Philadelphia Semiconductor Index declined around 2% that session.
The Palo Alto, California-based company reported fiscal second-quarter results late Wednesday that showed strong growth in its AI business. AI semiconductor revenue reached $10.8 billion, up 143% from the prior year, slightly ahead of some analyst estimates. Overall revenue rose 48% to $22.2 billion.
However, investors focused on forward guidance. Broadcom forecast $16 billion in AI chip revenue for the fiscal third quarter, below Wall Street expectations of about $17.2 billion. The company also maintained its fiscal 2026 AI semiconductor sales target at $56 billion without raising it, disappointing some analysts who anticipated a higher figure.
Chief Executive Officer Hock Tan commented on the results in a statement accompanying the earnings release.
Analysts attributed the reaction to high expectations built around the ongoing AI infrastructure boom, in which Broadcom designs custom accelerators for major cloud providers and tech firms including Google, Meta and others. Despite the miss relative to forecasts, the company continued to report robust year-over-year growth in its AI segment.
The selloff extended across the chip sector Thursday, with several names posting losses even as some broader market indexes showed resilience. The Nasdaq composite finished the session slightly lower, while the Dow Jones Industrial Average advanced, reflecting some rotation into other sectors.
Details on the exact drivers behind the tempered outlook, including any shifts in customer demand or project timelines, were not immediately detailed beyond the guidance figures. Broadcom has expanded its customer base for custom AI chips, but specifics on individual contributions remain subject to typical quarterly disclosures.
The episode highlights the sensitivity of AI-related equities to quarterly signals amid rapid sector expansion. Chip stocks had seen substantial gains earlier in 2026 on expectations of sustained AI investment. Market participants noted the pullback occurred despite Broadcom posting results that beat expectations on several current-quarter metrics.
As of Friday, trading in Broadcom and related shares continued to reflect the post-earnings volatility, with some observers viewing the move as a healthy correction after prior rapid advances rather than a fundamental shift in AI demand trends. No updated company guidance or regulatory filings altering the picture were reported by late Friday.
